David Cameron sparked a fresh row on public spending last night when he indicated that the north-east of England and Northern Ireland may face a squeeze under the Tories.

In a move condemned by Labour as "alarming", the Tory leader said the state's share of the economy was too big in some parts of the country.

"In Northern Ireland it is quite clear – and almost every party accepts this –that the size of the state has got too big," Cameron told Jeremy Paxman in an interview on BBC1.

"We need a bigger private sector. There are other parts of the country, including in the north-east. The aim has got to be to get the private sector, to get the commercial sector going.

"Over the next parliament we have got to see a faster growing private sector, we've got to broaden our economic base and we need to have a rebalancing of the economy between the commercial and private sector on the one hand and between the state sector on the other."

Labour was quick to criticise Cameron. Liam Byrne, the chief secretary to the Treasury, said: "Alarmingly for regions outside London [David Cameron] claimed investment in the regions like the north- east was unsustainable, while at the same time saying that tax cuts for millionaires were sustainable.

"With every passing day David Cameron's big society sounds more and more like the same old Tories – tax cuts for the few at the expense of cuts to essential services and to our regions."

Cameron's remarks about the large size of the state in Northern Ireland and the north-east followed the Tories' decision to highlight in their manifesto the disparity in the size of the state in different parts of the UK. The manifesto featured a map of the country which showed each region according to the size of their contribution to the economy.

Northern Ireland, which accounts for 2% of the economy, was tiny on the map. The north-east of England, accounting for just 3%, was also small. Tory sources said that Cameron was talking about boosting private enterprise rather than imposing spending cuts.

The sources said they had shown the importance of rebalancing the economy in favour of the private sector in Northern Ireland by pledging in their manifesto to draw up a paper on lowering corporation tax in the province.

The demand for lower corporation tax has long been a demand of politicians across the spectrum in Northern Ireland. One of these parties, the Ulster Unionists, has formed an alliance with the Tories who may now come under pressure in Northern Ireland in the light of Cameron's pledge to reduce the size of the state.

The Tory leader made his remarks last night when Paxman asked him whether he stood by his remarks in a speech in January about the size of the state. Cameron endorsed these words from January: "In some parts of the country the state accounts for a bigger share of the economy than it did in the communist countries in the old eastern bloc. This is clearly unsustainable."

Underlining his point, Cameron told Paxman last night: "I do think some programmes in government have got out of control. There are things that government does, like ID cards like some of the IT schemes, that I think government shouldn't do. I would like to see those reduced."

But he insisted that he was not relishing cuts. "You can't make this into some sort of ideological crusade. The crusade I have is to make our society bigger, richer and stronger," he said.

Cameron also used the interview to criticise Vince Cable, the Liberal Democrat Treasury spokesman, who would be candidate for chancellor if the Tories were forced to negotiate a coalition in a hung parliament. The Tory leader, who reiterated his view that a hung parliament would lead to stalemate, said: "I don't agree with Vince Cable. He thinks we shouldn't get on with cutting waste this year … I don't see him as some economic soothsayer, frankly."

Cameron's criticism of the Lib Dems was echoed in comments made by the foreign secretary, David Miliband, in an interview with the Guardian who accused Clegg of trading on a myth – that "Britain has experienced 65 years of failure".

Miliband also warned against tactical voting, saying that a strong Lib Dem showing in 100 key Tory-Labour marginal constituencies would be decisive in whether the Conservatives won power.

He said voting Labour in such seats was "the only way to keep progressive politics governing this country", adding: "We have said for a long time that David Cameron was not clear what he stood for, and I think Nick Clegg is only clear what he is against. They are riding the anti-politics wave.